Crypto Exchange FTX Close To Buying BlockFi, Reports Suggest - Forbes

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Topline

Cryptocurrency exchange FTX is nearing a deal to buy embattled cryptocurrency lender BlockFi for about $25 million, CNBC reported Thursday citing three sources, a deal that values BlockFi far below its prior multibillion-dollar valuations and caps a dramatic collapse for the company.

Key Facts

The deal is expected to close next week, a source told CNBC.

BlockFi CEO Zac Prince refuted the price tag in a Thursday afternoon tweet, writing he “can 100% confirm that we aren’t being sold for $25M.”

BlockFi’s $25 million price tag is a tiny fraction of its prior valuations: a $350 million Series D funding round last March valued the company at $3 billion and The Information reported last June BlockFi sought new funding at a $5 billion valuation.

Madelyn McHugh, BlockFi’s vice president of communications, said in a statement to Forbes that “BlockFi does not comment on market rumors.”

Bloomberg also reported FTX is closing in on an acquisition BlockFi, citing people familiar with the matter, though the outlet didn’t report financial details on the deal.

FTX, which was founded by its 30-year-old billionaire CEO Sam Bankman-Fried, didn’t immediately respond to Forbes’ request for comment.

Key Background

The Wall Street Journal reported last Friday that FTX was looking to acquire a stake in BlockFi, while The Block reported Wednesday FTX was looking to buy the lender outright. FTX extended a $250 million credit line to BlockFi last week. Bloomberg reported earlier this month BlockFi sought roughly $100 million in new funding at a roughly $1 billion valuation. Prince announced June 13 the company cut its workforce by about 20% due to a “dramatic shift in macroeconomic conditions” that “had a negative impact on our growth rate.” The cryptocurrency market has crashed rapidly in 2022, and bitcoin is down 60% year-to-date to $19,056.

Big Number

$20 billion. That’s how much Bankman-Fried is worth thanks to his stake in FTX and his Alameda Research cryptocurrency trading firm, according to Forbes’ calculations, making him the 75th wealthiest person in the world. FTX raised $400 million in a January funding round, valuing the firm at $32 billion.

Crucial Quote

“We're willing to do a somewhat bad deal here, if that's what it takes to sort of stabilize things and protect customers,” Bankman-Fried told Forbes last week about his company’s extension of credit to BlockFi and other struggling cryptocurrency firms.